Monday, October 28, 1929 was opening night for New York’s Metropolitan Opera. Four thousand glittering attendees thronged to the elegant building on foot or in one of a thousand limousines to see Puccini’s Manon Lescaut, the melodramatic story of an innocent French girl seduced by wealth, whose reluctance to leave her riches for true love leads to her arrest, deportation to the wilds of America, and tragic death. Flash bulbs blinded the crowd, gathered to see famous faces and expensive gowns, as photographers recorded the arrivals of the era’s social celebrities. No one toasting the beginning of the opera season that night knew they were toasting the end of an era.
At ten o’clock the next morning, when the opening gong sounded in the great hall of the New York Stock Exchange, men began to unload their stocks. So fast did trading go that by the end of the day, the ticker recording transactions ran two and a half hours late. When the final tally could be read, it showed that an extraordinary 16,410,030 shares had traded hands, and the market had lost $14 billion. The market had been uneasy for weeks before the twenty-ninth, but Black Tuesday began a slide that seemingly would not end. By mid-November, the industrial average was half of what it had been in September. The economic boom that had fueled the Roaring Twenties was over.
Once the bottom fell out of the stock market, the economy ground down. Manufacturing output dropped to levels lower than those of 1913. The production of pig iron fell to what it had been in the 1890s. Foreign trade dropped by $7 billion, down to just $3 billion. The price of wheat fell from $1.05 a bushel to 39 cents; corn dropped from 81 to 33 cents; cotton fell from 17 to 6 cents a pound. Prices dropped so low that selling crops meant taking a loss, so struggling farmers simply let them rot in the fields. By 1932, over one million people in New York City were unemployed. By 1933, the number of unemployed across the nation rose to 13 million people – one out of every four American workers. Unable to afford rent or pay mortgages, people lived in shelters made of packing boxes.
No one knew how to combat the Great Depression, but wealthy Americans were sure they knew what had caused it. The problem, they said, was that poor Americans refused to work hard enough and were draining the economy. They must be forced to take less. “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate,” Treasury Secretary Andrew Mellon told President Herbert Hoover. “It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people.” Slash government spending, agreed the Chicago Tribune: lay off teachers and government workers, and demand that those who remain accept lower wages. Richard Whitney, a former president of the Stock Exchange, told the Senate that the only way to restart the economy was to cut government salaries and veterans benefits (although he told them that his own salary – which at sixty thousand dollars was six times higher than theirs – was “very little” and couldn’t be reduced).
President Hoover knew little about finances, let alone how to fix an economic crisis of global proportions. He had been born in rural Iowa, the son of Quaker storekeepers. Orphaned when he was nine, Hoover had bounced among the households of relatives, going to school at night. Hard work at Stanford made him a successful mining engineer and took him overseas, where he quickly made a fortune. When it came time to combat the Depression, Hoover’s instincts and experiences were on the side of the wealthy men insisting that the nation’s primary problem was laborers’ poor work ethic.
So Hoover tried to reverse the economic slide by cutting taxes and reassuring Americans that “the fundamental business of the country, that is, production and distribution of commodities, is on a sound and prosperous basis.” But taxes were already so low that most folks would see only a few extra dollars a year from the cuts, and the fundamental business of the country was not, in fact, sound. When suffering Americans begged for public works programs to provide jobs, Hoover insisted that such programs were a “soak the rich” program that would “enslave” taxpayers, and called instead for private charity.
By the time Hoover’s first term limped to a close, Americans were ready to try a new approach to economic recovery. They refused to reelect Hoover, and turned instead to New York Governor Franklin Delano Roosevelt, who promised to use the federal government to provide jobs and a safety net to enable Americans to weather hard times. FDR’s New Deal employed more than 8.5 million people, built more than 650,000 miles of highways, built or repaired more than 120,000 bridges, and put up more than 125,000 public buildings. It provided a social safety net and regulated business, banking, and the stock market. Common men and women across the country hailed FDR as their leader, electing him an unprecedented four times.
That Hoover and Roosevelt took such different approaches to meeting the national economic crisis is one of the great ironies of American history. Hoover began life as a poor child and yet, when faced with extraordinary poverty, sided with the wealthy. Roosevelt, though? He was the rich scion of an old New York family, educated at Harvard, from the same social circle as the glittering set that gathered on October 28, 1929 to watch Manon Lescaut.